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MEGHALAYA REGULATES ONLINE GAMING

June 9, 2021

By Rupin Chopra

‘THIRD FROM THE SEVEN SISTERS ADOPTS LICENSE-REGIME FOR GAMING’

In a pursuit to embrace the gaming industry at its core just like its sister States Nagaland and Sikkim, the Government of Meghalaya has decided to adopt a license based regime for regulation of gaming and gambling in the territory of the state. The Honourable Government of Meghalaya has published the Meghalaya Regulation of Gaming Act, 2021 (Meghalaya Act No. 9 of 2021) (hereinafter referred to as the “Act”) on March 26, 2021.[1] Amidst the ambiguity on the Central legislation governing online gaming in India, promulgation of the said Act has rather served as a stroke of luck for all the stakeholders in the gaming sector and people seeking leisure indulgences.

The Act aims at regulating both ‘games of skill’ and ‘games of chance’ involving betting or wagering of money or money’s worth however precluding the following:

  • Game of Arrow Shooting called Teer being regulated through Meghalaya Regulation of the Game of Arrow Shooting and the Sale of Teer Tickets Act, 2018 and;
  • Lotteries regulated under the Meghalaya Lottery (Regulation) Rules, 2019;
  • The Act has further withdrawn the applicability of Meghalaya Prevention of Gambling Act, 1970 to the Games of Skill or Games of Chance licensed under the said Act.

It is imperative to shed some light on this welcome move of the Meghalaya Government in the wake of the booming gaming industry in India:

  1. Application to obtain the Gaming License: The License under this Act shall be issued only to an Indian citizen or legal entity incorporated in India. An applicant for the License has to file an application to the State Government to obtain the License in such form and manner as prescribed by the Government along with the prescribed License fees. The Licensing Authority shall accept or reject such Application on its Discretion. The License once granted, shall remain in force for five years from the date of grant of the said License after that renewal has to be applied for.
  2. Gaming Royalty: The Licensee shall also pay to the Licensing Authority “Gaming Royalty” from time to time at regular intervals. Gaming Royalty refers to a percentage sum of money of Gross Gaming Revenue which is a sum of total amount of all bets made and the revenue generated from advertising, marketing and promotion under this Act minus the value of all winnings and prizes, bonuses and discounts and cash backs, as well as the payment gateway and banking charges in the course of the gaming period.
  • Establishment of Meghalaya Gaming Commission: Meghalaya State Commission shall be monitoring the gaming activities of all the Licensees and ensuring compliances under this Act. The Commission shall also be responsible to issue policy directions for regulating games of skill and games of chance to be played in fair and transparent manner which after approval of the State Government shall be binding on all the Licensees.
  1. Determining “Games of Skill” and “Games of Chance”: Under this Act, Games of Skill are defined as all such games where preponderance of skill over chance, including where the skill related to strategizing the manner of placing wagers or placing bets or where the skill lies in team selection or selection of virtual stocks based on analyses or where the skill relates to the manner in which the moves are made, whether through deployment of physical or mental skill and acumen, where the success in game depends on the existence of superior knowledge, training attention, experience and adroitness of a player for example; Bingo, Black Jack, Bridge, Poker, Poker Dice, Rummy, Solitaire, Teen Patti, virtual sports fantasy league games etc. whereas Games of Chance mean all such games where there if preponderance of chance over skill for example; Baccarat, Craps, Keno, Roulette, Slots etc. These games shall be conducted through non-restricted geo-fenced internet or at a physical premises.
  2. Offences and Penalties to be paid for breach:
S. No. Offences Penalties
1 Contravention of provisions of this Act Not exceeding INR 2 Lakh
2 Breach of the License by Player while playing any Games of skill or chance at the approved website or physical premises. Not exceeding INR 10, 000 for first three violations and thereafter shall be prohibited in gaming under this Act.
3 License obtained by furnishing incorrect information. Not exceeding INR 2 Lakh
4 Deliberate mis-declaration to the Licensing Authority. Not exceeding INR 2 Lakh
5 Failure to submit statement of accounts to the Government required by this Act or submission of incorrect statements. Not exceeding INR 2 Lakh
6 Issuance of misleading advertisement. Not exceeding INR 1 Lakh
7 Operation of gaming without the License Not exceeding INR 10 Lakh with imprisonment which may extend for a period of up to two years.

Conclusion

The progressive approach adopted by the State Government of Meghalaya has proved out to be a significant step towards liberalizing gaming operations in India amidst the blanket ban in some States like Andhra Pradesh, Telangana and Tamil Nadu. In addition to the sustaining of revenue generation to the Meghalaya State Government, this newly formed license-based regime of physical and online gaming will also generate employment and cater recreational needs of people at large.

[1] Available at http://meglaw.gov.in/Notification/LL_(B)_46_2020_70_Dated_Shillong_the_26th_March_2021.pdf

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